Investment Philosophy

The mission of Blue Granite Capital (“BGC”) is to provide personalized money management services in a tax efficient manner while protecting multi-generational wealth. Our disciplined approach utilizes sound, proven methods to preserve capital, while focusing on the long-term growth, safety and diversification of our clients’ assets. Asset Allocation is the cornerstone of our core investment philosophy, providing the foundation for capital preservation and risk reduction, two critical elements to investing. Asset Allocation provides the means to balance both equity and fixed income investments that in turn enhance returns, reduce risk and generate income. A portfolio’s success is determined by the proper weighting of stocks and bonds. Our core portfolio has been constructed by identifying what we believe are the best companies, especially those that pay significant dividends, which benefit from globalization, technological breakthroughs, cost advantages and market leadership. In an era of increasing stock market volatility, investing in high quality, proven market leaders has become more prudent. Blue Granite Capital has the experience, knowledge and resources to provide unparalleled service within the Charleston community.

Most importantly, a client’s goals must be the driving force behind any investment strategy. BGC incorporates each client’s individual requirements and implements them into tailored investment strategies. BGC efficiently allocates assets, both equity and fixed income, based upon the client’s risk profile to maximize returns while minimizing risk and volatility. The resulting diversification increases the likelihood of capturing the best appreciation the market can offer while lowering overall volatility. BGC will not subject clients to undue risk where appreciation potential is unwarranted. Simply stated, we enhance portfolio growth without taking unnecessary risk to achieve that growth.

BGC’s disciplined research approach concentrates stock selection from a very thoroughly analyzed group of market leading companies, in the best position to take advantage of the expected economic environment. The dominance of these industry leaders assures financial stability and drives earnings growth. Earnings growth drives cash flow and value to shareholders. Our investments focus upon appropriately valued companies that pay substantial dividends. Our premise is that dividends reflect the real earnings of a company, demonstrating profitability and financial strength. Dividend paying companies often have more stable earnings and formidable balance sheets. Investors over time have successfully rewarded such companies with exceptional stock market performance. Shares of companies that pay dividends tend to be less volatile than the overall market. Of most significance, the income generated from dividends has contributed approximately 45% of the total return of the S&P 500 index since 1926. To ignore such a substantial return as part of a comprehensive strategy would be imprudent. Conservative investment theory suggests that investors consider a dividend strategy an integral part of their asset allocation.

Utilizing asset allocation and our stock selection strategy, BGC inherently seeks to limit losses and reduce risk. The impact of reducing risk and standard deviation provides an enhancement to portfolio performance. Our long-term investment outlook enhances the competitive advantages of the most dominant companies in their respective industries. When appropriate BGC will hedge portfolio risk to further protect our client’s principal.

Asset allocation is the key mechanism by which we incorporate a blend of equities and fixed income into our investment strategy. An integral part of BGC’s work is selecting specific stocks and bonds for our portfolios. Of primary concern in analyzing companies is valuation as measured by a number of different investment parameters. Ratios such as price to earnings, price to book value, and operating margins are evaluated in determining a company’s worth. The growth in a company’s revenue, earnings, cash flow and dividends provide a benchmark for determining stock price appreciation. Additional factors such as industry competition, acquisition and growth strategies and the current economic environment also impact our analysis and decision whether to buy a company’s stock. In the final analysis, all the above factors are considered to determine whether a company fits our stringent criteria to be included within our model portfolios.

The fixed income component of the portfolio is determined by a similar disciplined investment methodology. Factors we analyze include: agency ratings, debt coverage, debt to equity ratios, call features, improving credit and the interest spread versus the Treasury Bond curve. In addition to fundamental credit research, BGC gauges the economic picture to determine the correct point on the yield curve and whether to overweight corporate bonds, asset-backed securities, agency bonds or treasury bonds. To reduce interest rate risk we employ a technique known as laddering. By purchasing bonds at both ends of the maturity spectrum {short & long} price volatility associated with changes in rates is reduced. The net effect increases total bond income generated while limiting potentially negative price movements. In summary, the combination of fundamental research, security analysis, and macroeconomic forecasting determine the appropriate security selection for inclusion in our portfolios.